Questions and Answers – March 26

Press Release – Office of the Clerk

Research and DevelopmentEffect on Economy 1. JAMES SHAW (Green) to the Minister of Science and Innovation : Does he stand by his statement that the Government will build a strong business-led R&D ecosystem to strengthen and diversify New …

Research and Development—Effect on Economy 1. JAMES SHAW (Green) to the Minister of Science and Innovation: Does he stand by his statement that the Government will “build a strong business-led R&D ecosystem to strengthen and diversify New Zealand’s economy”?

Hon STEVEN JOYCE (Minister of Science and Innovation): Absolutely. That statement was made on the launch of theTIN100 in October 2014, which noticed a billion-dollar increase in annual turnover by the TIN100 companies over a 5-year period, and a big 9.7 percent lift in the research and development investment across the TIN 100 over a 1-year period. So it is a very exciting and positive story. My exact quote was that “The Government will continue to back Callaghan Innovation to work alongside New Zealand’s technology companies and build a strong business-led R&D ecosystem to strengthen and diversify New Zealand’s economy.”

James Shaw: By what percentage has Government research and development spending increased under this Government?

Hon STEVEN JOYCE: The latest figures we have are that it increased over the period 2010 to 2012 from 0.5 to 0.58 percent of GDP, which is a 25 percent increase in a 2-year period.

James Shaw: Has he seen the results of the recent Statistics New Zealand Business Operations Survey that show that in the National Government’s first year of office 8 percent of businesses invested in research and development, and in 2014 the percentage of businesses investing in research and development was still 8 percent?

Hon STEVEN JOYCE: The interesting thing about the Business Operations Survey is that it is virtually every business in the New Zealand economy. So the difficulty with that particular statistic is that you are adding in all the plumbers, carpenters, consultants, and so on as the percentage of New Zealand companies. Probably a better estimate would be of the technology companies. What I tend to follow is the growth in the technology companies and the growth in research and development percentages as a percentage of GDP overall. I think that is probably a more telling situation in terms of the growth in research and development than just a bald number around a percentage of the total number of New Zealand companies.

James Shaw: By talking about only the relatively small number of businesses that he has chosen to receive research and development grants and ignoring the 92 percent of businesses that do not invest anything in research and development, is he being as tricky with the data as Simon Bridges on a bad day?

Mr SPEAKER: Order! If a political answer is given, do not blame me.

Hon STEVEN JOYCE: I just think the member is completely wrong. He is wrong on many fronts, actually. For such a short question, he has managed to get a lot of things wrong, including his reference to Mr Bridges, who is a very dedicated and hard-working Minister for this 26 Mar 2015 Oral Questions Page 2 of 16

Government. But also he is wrong in terms of suggesting that somehow I pick the people whom Callaghan Innovation gives funding to. That is just not correct. I suggest that he might like to get together with Mr Cunliffe, who is suggesting that I am not picking enough of the companies and that I am actually being way too objective in my criteria setting. The simple reality is that companies get the opportunity to participate in that on an objective basis, and those are the companies that actually do research and development. And if the member thinks I should ask the local hairdresser to do research and development, I do not think that is a good idea.

James Shaw: So given that there has been no change in the proportion of businesses investing in research and development since 2009, what is the return on investment of the additional Government spending on research and development?

Hon STEVEN JOYCE: Again, I am sorry, but if I was the member, I just would not hang my hat on a statistic that has got no relevance to the overall situation. You need to focus on the amount of research and development actually being conducted by New Zealand companies—and we will have updated statistics on that soon—and also focus on some of the independent metrics and measures, including the one I gave out to the member in the answer to the first question: the TIN100. He may be cynical about that but that is actually New Zealand’s technology companies, independently measured—nothing to do with the Government. The number that it showed was an increase of 9.7 percent in research and development across those top 100 companies in the year under study.

James Shaw: Noting the Minister of Finance’s advice to this House that “Governments have to be very, very careful about picking winners”, why has he not developed a research and development funding strategy that reaches beyond a select number of hand-chosen businesses?

Hon STEVEN JOYCE: The member is just simply incorrect. It does not matter how often he repeats it in his questions, that does not change the fact that he is wrong. There are some very simple objective criteria for the research and development growth grant programme, which are based on the amount of research and development conducted and the intensity of that research. Any New Zealand company—any New Zealand company—has the ability to apply for and secure that on an objective basis. If the member wants to keep persisting that that is not the case, then he needs to go and visit his friends in the left-wing trolling community who keep running that stuff.

James Shaw: What other examples of increased Government spending can he think of where the Government has invested money for zero return?

Hon STEVEN JOYCE: There was a lot of it between 1999 and 2008. I would have to go back and actually go through all the different things, because there was this massive increase in Government spending, most of which was of a very, very low quality and sent New Zealand into a recession before the rest of the world in the global financial crisis. Unfortunately, the example the member brings today is the wrong example, because that is lifting New Zealand’s business research and development.

Inflation—Reports 2. Dr JIAN YANG (National) to the Minister of Finance: What reports has he received on how low inflation is benefiting New Zealand families?

Hon BILL ENGLISH (Minister of Finance): I have seen a report from the Reserve Bank quite recently that forecasts zero percent inflation in the year to March 2015—that is about now. So we have a very unusual situation where we have solid economic growth, which is delivering moderate and—for many New Zealanders—consistent wage increases, but at the moment, at least, zero increase in the cost of living. This means that families can get some real increase in their incomes. At the same time the Reserve Bank indicated an interest rate track that is a bit lower than what was expected, again assisting the affordability of what have been, for some families, rapidly rising housing costs. 26 Mar 2015 Oral Questions Page 3 of 16

Dr Jian Yang: How is solid economic growth and low inflation benefiting New Zealand families through strength in the labour market?

Hon BILL ENGLISH: Low inflation—in fact, at the moment, record low inflation—along with the growing economy is giving many businesses the confidence to invest more money and employ more people. Statistics New Zealand figures show that in 2014, 80,000 new jobs were created across the country and average wages rose 2.5 percent last year. Average wages are expected to grow by a further $6,000 by September 2018, from $56,000 today. That is an increase of around 20 percent up to now, compared with the rate of inflation over the same period of around 11 percent. One particularly interesting statistic is that the labour market participation rate—that is, the proportion of the adult population available for work—is the highest it has ever been, at 69.7 percent, indicating that New Zealanders in general are confident about their prospects of getting a job, even if for some of them that turns out to be a bit of a challenge.

Dr Jian Yang: What other reports has he seen on the benefits of economic growth for New Zealand households?

Hon BILL ENGLISH: An important aspect of the current outlook for the economy is the confidence of businesses and consumers. ANZ recently released its consumer confidence survey—the most recent one—which shows a small lift in consumer confidence, but it is at reasonably high levels, and they are consistent with growth for the year ahead of around 3 percent. The main drivers of this confidence, ANZ reports, are the recent fall in petrol prices, low inflation, employment growth, and a generally positive outlook that Kiwis have for wage growth.

Dr Jian Yang: Do current economic conditions of low inflation but solid growth impact on Government revenue; if so, what steps is the Government taking to return its books to surplus?

Hon BILL ENGLISH: The current conditions do work well for the economy but it is clear that low inflation and low oil prices have a significant effect on Government expenditure and revenue. For instance, because of the drop in oil prices, we will be expecting to collect significantly less tax and royalties on oil over the next 12 months. The Government, though, in response to this, is continuing to responsibly manage its finances. We will be continuing to restrain new spending, and that is justified by the fact that there is low inflation, but also continuing to increase the quality of public services.

Social Housing—Commentary 3. PHIL TWYFORD (Labour—Te Atatū) to the Minister responsible for HNZC: Does he agree with the National Business Review who asked “Is the Government’s social housing privatisation policy in tatters”?

Hon BILL ENGLISH (Minister responsible for HNZC): No, the Government does not have a social housing privatisation policy. Following the member’s question, I have looked at the article in question, which is particularly ill-informed. We have a plan that means that the nearly $2 billion that taxpayers spend each year on direct housing support will provide better results for tenants, more social houses, and better houses. The National Business Review, along with Labour Party members and Green Party members, are the only people in New Zealand who believe that the way we do State housing now cannot be improved. We believe it can be improved.

Phil Twyford: Is he aware that the Waikato Times this morning says that his State house sell-off “smacks of deception” because of his “lack of candour and camouflaging of its intentions behind comforting references to the Salvation Army”; if so, is this just another example of them being wrong and him being right?

Hon BILL ENGLISH: Yes, I do disagree with the Waikato Times, and as the Government releases more and more information about the sorry state of State housing, it will certainly not be able to accuse the Government of lack of candour. We will have been, and will be, completely open about the policy, completely open about the information—and that, of course, allows people to ask us questions and to shape the policy. That is what we will continue to do, as we have been doing in 26 Mar 2015 Oral Questions Page 4 of 16

public consultation over the last 6 weeks—where that consultation was constructive, informative, and insightful, including in Dunedin.

Phil Twyford: Is he aware that the Salvation Army says that the lives of tenants would not be improved by his State house sell-off; if so, how will gouging Housing New Zealand as a cash cow for $220 million in tax and dividends, as this morning’s Dominion Post notes, improve the lives of thousands of vulnerable Kiwi families living in garages and camp grounds?

Hon BILL ENGLISH: I think the member has pointed exactly to what needs to change. So here we have the Labour Party saying: “There are thousands of vulnerable families living in carriages and camp grounds, let’s keep them there. Let’s leave it exactly how it is.” We, however, find that intolerable when we have $18 billion of assets and $2 billion of subsidies. So we think we should get people out of camp grounds and garages, and that is what this policy will do.

Phil Twyford: Does he accept the Dominion Post’s view that he “stumbles on … sowing confusion and doubt” with his housing policy, and that his Government is having trouble finding buyers for the State houses it wants to sell, and that it is also having trouble deciding what social housing will look like, who will run it, and who will benefit; if so, will he be asking Crosby/Textor for a refund?

Hon BILL ENGLISH: No, I disagree with the Dominion Post. As the member pointed out before, when there are thousands of people in garages, camp grounds, and overcrowded houses we cannot stand by and allow that to continue. He wants to argue to keep them there; we want to argue to change it. There is broad agreement in the community housing sector that these policies are the best opportunity in a generation to change it.

Phil Twyford: Which statement best describes his Government’s State house sell-off: “typical third term government’s over-reach into fringe policies”, which was the National Business Review; or “not a triumph of governance or policy-making … perhaps National’s third term will be just a muddle”, which was the Dominion Post?

Hon BILL ENGLISH: No, none of those statements. Some of the statements, though, that describe the benefits of our policy were statements made by that member in his speech last year to Community Housing Aotearoa, supporting the policy before his leader got to him and told him to oppose it.

Phil Twyford: Why does he not just adopt the well-balanced and well-considered policies outlined by the Labour housing spokesperson in a well-publicised speech aimed at growing the community housing sector, large-scale urban development, and building actual houses for people to live in, and why does he not drop his own half-baked policy to flick off thousands of State houses to property speculators and property developers?

Hon BILL ENGLISH: Because we need to get results very shortly and we cannot wait around to follow the model that that member has supported, which did work 50 years ago but does not work today. That is why we do not adopt his policies—because they will not work. That is why iwi, community groups, developers, and people who want to redevelop their communities and get a better result for their tenants are working with the Government every single day to make sure that this policy can be put into place. That member knows, when he talks to those groups, that they support the Government policy, because they are sick of seeing thousands of people in garages, overcrowded houses, and caravan parks and Governments that did nothing about it.

Business—Reports 4. NUK KORAKO (National) to the Minister for Economic Development: What reports has he received on the progress of New Zealand businesses succeeding internationally?

Hon STEVEN JOYCE (Minister for Economic Development): Last night I was privileged to attend the New Zealand International Business Awards in Auckland, where some of New Zealand’s top exporters were recognised for their excellence in innovation, design, operations, marketing, and leadership across the world. These are the companies that get out there and compete and win on the 26 Mar 2015 Oral Questions Page 5 of 16

world stage. Magic Memories, a Queenstown-based tourism photography company, won the Supreme Award for International Business. Smaller businesses were also recognised with International Volunteer HQ, whose founder and chief executive officer, Dan Radcliffe, took out the Entrepreneur of the Year award in October, winning the award for the under $10 million category. Other award winners include Milmeq, Powershop, and Synlait and its chief executive officer, John Penno. Miraka from Taupō won the new award for Māori Excellence in Export.

Nuk Korako: How is the Government helping New Zealand businesses to succeed and grow internationally?

Hon STEVEN JOYCE: The Government is very active in assisting these companies and if you actually read through the list of 25 finalists at the business awards last night, all but two of them have been assisted in some way by Callaghan Innovation or New Zealand Trade and Enterprise, and in many cases, by both. To continue growing the number of New Zealand businesses succeeding internationally, it is important that we continue to grow the number and range of businesses that engage with both of those entities and also with our regional business partners. That is why in Budget 2014 we announced an additional $69 million over 4 years to boost New Zealand Trade and Enterprise’s presence in important markets like South America, the Middle East, and China and to grow the number of companies that it works with intensively up to 700. During the election campaign last year we also pledged to invest further increases in business research and development co-funding with Callaghan Innovation.

Nuk Korako: Ka mihi anō. What else is the Government doing to grow New Zealand exports?

Hon STEVEN JOYCE: For a small country at the bottom of the world a long way from our traditional and emerging trading partners, it is important that we give our companies the best opportunity to compete in international markets. To secure that access to international markets, this Government has been advocating and negotiating, and will continue to advocate and negotiate, for free-trade agreements, whether they be with the Gulf Cooperation Council, the Trans-Pacific Partnership, or the New Zealand – Korea free-trade agreement signed by Tim Groser on Monday. That is why we will also be opposing the Fighting Foreign Corporate Control Bill, which would torpedo the Korean free-trade agreement and others that we are negotiating. To be perfectly clear to anybody opposite who might be confused, that bill, which is supported by both New Zealand First and the Labour Party, is entirely inconsistent with the Korean free-trade agreement and with past free-trade agreements, and you cannot be in favour of both.

Hon Te Ururoa Flavell: Tēnā koe, Mr Speaker. In light of the outstanding successes by exporters like Miraka, which is the inaugural winner of the Māori Excellence in Export award, He Kai Kei Āku Ringa, at the New Zealand International Business Awards last night, what is the Government doing to support greater numbers of Māori businesses to be able to trade internationally?

Hon STEVEN JOYCE: The Government is working very closely with, actually, yourself, Minister Flavell, and also with the Māori Party and Te Puni Kōkiri around the implementation of the Māori Economic Development Strategy and Action Plan: He Kai Kei Āku Ringa. He Kai Kei Āku Ringa provides a blueprint for a productive, innovative, and export-led Māori economy that will support better-paying jobs and higher living standards. It is following through on that commitment through things like the $30 million Māori Information and Communications Technology Development Fund, the $8 million Māori Innovation Fund, and encouraging New Zealand Trade and Enterprise to expand its relationship with Māori companies. And one way that was done, of course, was the announcement of Miraka’s win at the New Zealand International Business Awards last evening. 26 Mar 2015 Oral Questions Page 6 of 16

Roading, Northland—Spending 5. KELVIN DAVIS (Labour—Te Tai Tokerau) to the Minister of Transport: Will transport spending in Northland return to the level that this Government inherited, given annual NZTA funding for the region has fallen by $36 million since 2008/09?

Hon SIMON BRIDGES (Minister of Transport): No, because to return transport spending to what the last Labour Government spent, this National Government would actually have to reduce spending. After neglect from Labour, we are spending $750 million to date, over 40 percent more—some $30 million more each year—on Northland than the last Government, so we are backing the north. The member should not be cherry-picking his figures between years. He is as tricky as Russel Norman on climate change.

Mr SPEAKER: Order!

Kelvin Davis: Can he confirm that in 2008-09, the Labour Government budgeted $125 million on Northland transport, whereas in the last 2 years, his Government has spent less than $90 million, and that is why communities like the Pipiwai-Tītoki advocacy group are sick of the excuses, sick of the threats from National MPs, and sick of bullying from National MPs—

Mr SPEAKER: Order! Just ask the question.

Kelvin Davis: —when all they want is their roads sealed?

Hon SIMON BRIDGES: What is clearly happening here is that the member is cherry-picking his figures. If he gets away from isolated single-year examples, every year on average we have spent more, and in total we have spent more, because we back the north. As I said in my primary answer, if we were to follow the approach of the Labour Government to Northland, we would be spending a hell of a lot less there.

Kelvin Davis: Has he considered that Northlanders would prefer long-term regional investment and the transport priorities they identify, rather than be treated with contempt by panic bribes such as the double-laning of bridges, especially when we now learn that these bridges might not even get built because the New Zealand Transport Agency says they are not worth the cost?

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. You pinged the Hon Mr Bridges earlier for a comment at the end of his question because it was political, but then Kelvin Davis in his questions today has been extremely provocative, using misinformation as well as other epithets to throw in the Government’s direction. That does not lead to order.

Mr SPEAKER: And I—[Interruption] Order! I accept the point the Minister is making. These questions start OK, and then they become totally provocative and unnecessary, and effectively out of order. I have two courses of action: I can rule the question out of order, in which case the member loses an opportunity, or I can allow the Minister to answer and give the Minister quite a lot of licence with his answer in view of the way the questions—[Interruption] Order! I would be grateful if the Hon Ruth Dyson acknowledged that when I am on my feet, giving a ruling on a point of order, she does not interject. On this occasion, I will allow the Minister to answer the question.

Hon SIMON BRIDGES: The member should quit while he is behind. [Interruption] I would be embarrassed to be asking the sorts of questions that he is asking. We have spent—

Mr SPEAKER: Order!

Hon SIMON BRIDGES: It is great to see I elicit that kind of excitement from the Opposition. I would be embarrassed to be asking the sorts of questions he has when we compare our record in Northland on roads with that party’s record. We have got bridges coming up, we have got many other projects, and a highway that, unlike the Opposition, we do not call the holiday highway, because, like that member, actually, we know it is what the people of Northland expect and deserve. [Interruption]

Kelvin Davis: Supplementary question.

Mr SPEAKER: Order! Before I call the member, I will allow him to ask a supplementary question, but if it ends where the last two have ended I will be ruling it out of order. 26 Mar 2015 Oral Questions Page 7 of 16

Kelvin Davis: Has he considered that if National had only invested in Northland’s roads when it had the chance rather than slashing spending, those roads might have carried National voters to the booths on Saturday rather than paving the way for an embarrassing defeat?

Hon SIMON BRIDGES: This member should learn from Russel Norman, who at least knows how to misleadingly play with figures.

Metiria Turei: I raise a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! I have a point of order from Metiria Turei.

Metiria Turei: You repeatedly tell the Opposition that they are not to make political points in their questions, and you allowed Mr Bridges to continue with that statement. I find it offensive and would ask that you take action consistently across the House.

Mr SPEAKER: Order! I will hear from the Hon Gerry Brownlee [Interruption] Order! This is an important matter.

Hon Gerry Brownlee: Surely you are not going to be put in a position of ruling that it is now inappropriate to offer compliments to other members in the House.

Mr SPEAKER: I am not sure that that comment helps me at all. The difficulty I have with Metiria Turei’s point of order is that I have reminded Mr Davis not to ask questions that have a lot of political implication in them. He has completely ignored my advice now on three successive occasions. As I said, when I get a political question like that I will give a lot of leeway to the Minister answering it. It would be helpful when the Minister does answer the question if he did not refer to Dr Russel Norman in that way. Does the Minister have—[Interruption] Order! I am on my feet. Does the Minister have an answer to complete?

Chris Hipkins: I raise a point of order, Mr Speaker. On a related but slightly different note, there are some Speakers’ rulings around bringing parties that are not party to a question into a debate. In this instance, yes, Kelvin Davis asked a political question and can expect a political answer. However, bringing an insult to another party into the answer is actually against—

Mr SPEAKER: Order! I thank the member. If he had noted my ruling to the Minister inviting him to continue, I addressed that point.

Hon Gerry Brownlee: I raise a point of order, Mr Speaker.

Mr SPEAKER: Listen, I am getting to the stage when my patience will run out. If it is a fresh point of order and it is relevant to the order of the House—[Interruption] Order! I am on my feet. I am very inclined to be asking that member to leave the House. This is a point of order. I have said I will hear it from Gerry Brownlee. I hope it is useful.

Hon Gerry Brownlee: Well, I hope it is too. My point of order is that the true offence, if Mr Hipkins had thought about it, was the Hon Simon Bridges drawing attention to a member who is not present in the House.

Mr SPEAKER: Order! That is not going to help the order of the House either. Does Mr Simon Bridges wish to complete his answer quickly?

Hon SIMON BRIDGES: Let me treat the question very seriously. Under any credible basis this Government has invested more in roads in the Northland infrastructure than the last Labour Government. We have an ambitious programme going forward of some $2 billion on roads, which that party does not even support and dismissively calls holiday highways.

Ron Mark: What is the amount of money taken out of Northland in road-user charges and fuel excise duties relative to the amount being re-invested back into Northland?

Hon SIMON BRIDGES: I could not say offhand, but I have absolutely no doubt we invest more through central government in roading than we take out of Northland.

Mr SPEAKER: Supplementary question, Kelvin Davis, and I do hope this one is within the Standing Orders.

Kelvin Davis: Was it a good use of $70 million of public money to announce that the 10 bridges would be double-laned, given that Northlanders’ priorities are flood spots, potholes, road slumps, and slips, which are not being fixed because he has slashed Northland’s road maintenance? 26 Mar 2015 Oral Questions Page 8 of 16

Hon SIMON BRIDGES: No, and it is great to have confirmation—[Interruption] Yes, I should say. The Labour Party is against every single roading project that we try to put ahead in the north. It calls Pūhoi to Wellsford the “Holiday Highway”. It does not think that the double-lane bridges, which the north knows are vital lifelines, should go ahead. It opposes, opposes, opposes, and the north knows that, and that is why Labour’s candidate, whom it has thrown under the bus, will come a very distant third.

Ron Mark: Will the Minister give the House a guarantee that no rural provincial council will suffer a reduction in the percentage subsidy it currently receives through the Government’s funding assistance for rural roads in the financial years 2016, 2017, 2018, and 2019? Will you give that guarantee?

Hon SIMON BRIDGES: Well, the member is asking a very detailed, granular question that I would want to go away and check. But let us be very clear that under the Government’s policy statement in the upcoming National Land Transport Programme, what we have done is make sure that there is more money in every class, including in rural and regional roads. Unlike the last Labour Government, we back the regions.

Ron Mark: To be helpful, I seek leave of the House to table a table provided by the New Zealand Transport Agency showing that over the next 4 fiscal years the financial assistance rates will be reduced for most rural councils.

Mr SPEAKER: Is that document available freely on the internet? It is—then no.

Benefits—Savings 6. Hon JUDITH COLLINS (National—Papakura) to the Associate Minister for Social Development: How much has the Government saved as a result of its benefit fraud initiative?

Hon JO GOODHEW (Associate Minister for Social Development): Since benefit fraud reform initiatives began 2 years ago we have saved the taxpayer over $60 million in future benefit payments. Only a small minority of beneficiaries take money they are not entitled to, but those who do cost tens of millions of dollars each year. These changes make it difficult to defraud the welfare system and hold people accountable for their actions.

Hon Judith Collins: How is the Government encouraging beneficiaries to comply with the welfare system?

Hon JO GOODHEW: Over the past 2½ years around 9,500 benefits have been cancelled after fraud was discovered. We expect to see fewer cases of benefit fraud as our case officers continue working closely with clients to ensure they declare their income and any changes to their relationship status. We have also identified 3,000 clients who have previously committed fraud. By managing these clients more closely, we can help to ensure that they do not reoffend.

Poto Williams: Will she be advocating on behalf of taxpayers that her Government place more of a proportionate focus on recovering the $1.2 billion per annum of money lost through tax evasion, compared with the slightly lesser amount of $20 million to $40 million per annum of benefit overpayments connected with prosecuted benefit fraud, or is white-collar crime just more acceptable to her Government?

Mr SPEAKER: The Hon Jo Goodhew, in as far as there is ministerial responsibility.

Hon JO GOODHEW: I thank the member for her question and the opportunity to correct her misassumptions. Last Budget this Government actually provided an extra $132 million to Inland Revenue to bolster its tax compliance activities, and, boy, has that been good value for money. Targeting the hidden economy, tax avoidance initiatives returned nearly $50 million—$5.51 for every dollar spent. Targeting property speculators returned $52 million, a return of $7.88 for every $1 invested. I thank the member for the opportunity to show her how wrong she is.

Poto Williams: I seek leave to table the Child Poverty Action Group report published in November 2003—

Mr SPEAKER: Order! No, no. That is a report that is available to all members. 26 Mar 2015 Oral Questions Page 9 of 16

Accident Compensation Corporation—Levies 7. SUE MORONEY (Labour) to the Minister for ACC: Was the then Minister for ACC the Hon Judith Collins correct when she said last year that the reason the Government ignored ACC’s recommendation for cuts to levies for employers and workers was “because we need to get to surplus”?

Hon NIKKI KAYE (Minister for ACC): I am advised that the previous Minister did not say that the Government ignored ACC’s recommendation. In fact, under law the Minister is required to consider ACC’s recommendations. Section 331 of the Accident Compensation Act anticipates that the Government may not accept the recommendation. Furthermore, section 300 sets out the wider test that the Minister must have regard to, which includes the public interest and may include a factor like the Government’s overall fiscal strategy.

Sue Moroney: Why did she cite section 330 and section 331(5) of the Act as giving her the legal authority to use ACC levies to return the Crown accounts to surplus?

Hon NIKKI KAYE: I cited those sections for two reasons. One reason is that under section 330 the Minister may take into regard the public interest, which may include a factor like the overall Government’s fiscal strategy.

Jami-Lee Ross: What information has the Minister seen regarding the impact of the Government’s decision on the ACC board’s levy rates recommendations?

Hon NIKKI KAYE: I have seen information that shows that if the Government had accepted the ACC board’s recommendations since 2010, levy payers would have paid $630 million more. The Labour Party needs to front up and confirm that under its policy of always accepting the board’s recommendations, levy payers would be almost $630 million worse off.

Sue Moroney: So with reference to her interpretation of section 330 of the Act, does that mean she could overcharge businesses and workers through their ACC levies to fund any other promises made by her Government—for example, to replace 10 bridges in the Northland electorate?

Hon NIKKI KAYE: It is becoming very clear that the member opposite does not understand the law. I would make three points. The first point is that under the law the levies are ring-fenced, so you cannot use the money for anything but claims. The second point that we have continued to make is we take a longer-term view around the levies, which means that if you took the Labour Party approach you would continually have levies going up and down, and we said: “Take a more conservative approach. In the long term that leads to stability, and that is what businesses need.”

Sue Moroney: Has she sought advice from Crown Law about the legal authority to overcharge ACC levies in order to get to surplus; if so, will she table that advice?

Hon NIKKI KAYE: Look, I receive regular legal advice, but what I would say to the member is that I am aware that in terms of the law it is entirely appropriate, and it is set out under section 330, that the public interest is taken into account, and that can include the Government’s overall fiscal strategy. But I would make a few other points to the member. There are a range of other factors that are taken into account, including stability of levies for businesses.

Sue Moroney: I raise a point of order, Mr Speaker. It was a very specific question and—

Mr SPEAKER: Order! And it is being answered at the moment. If the member would resume her—[Interruption] Order! Would the Minister like to complete her answer?

Hon NIKKI KAYE: I just want to finish what I was saying. As I said, there are a range of other factors that are taken into account including stability of levies for businesses, including future claims that may come in the future as a result of gradual process, including a range of other factors, including the performance of the ACC scheme.

Sue Moroney: I raise a point of order, Mr Speaker. Having listened to the entire answer—

Mr SPEAKER: What is the point of the point of order?

Sue Moroney: So the point is that I specifically asked about advice from— 26 Mar 2015 Oral Questions Page 10 of 16

Mr SPEAKER: Order! If the member was concentrating on listening rather than jumping to her feet, she would have heard the answer. The question was definitely addressed in the answer. Does the member have further supplementary questions?

Sue Moroney: Is she disappointed—[Interruption] Well, I did not hear the answer about Crown Law specifically, and she has not tabled it yet, so—

Mr SPEAKER: Order! I have a very good mind to move to the next question. I invite the member to rise, ask the supplementary question, and make sure it is in line with the Standing Orders, otherwise we are moving on.

Sue Moroney: As they all have been. Is she disappointed that the Government has failed to get to surplus by growing the economy and instead has resorted to constraining economic growth by overcharging ACC levies?

Hon NIKKI KAYE: I am not disappointed because I do actually believe we are going to make surplus this year. Secondly, I can tell you that under our Government we have given $1.5 billion of levy reductions back. We were left with a $4.8 billion hole, and we absolutely are responsible for a very good ACC scheme.

Hon David Parker: Is overcharging New Zealanders for ACC by hundreds of millions each year the main reason that National’s support is collapsing in regions like Northland, or is it because of other abuses of power like that of—

Mr SPEAKER: Order! I cannot see any responsibility for that for this particular Minister. I will invite the member—

Hon David Parker: I raise a point of order, Mr Speaker. I cannot see any difference in principle between this line of questioning and the line of questioning around transport that the Minister was asked earlier in question time.

Mr SPEAKER: I invite the member, if he has a question, to ask it to the Minister for ACC in line with the Standing Orders. If he can do that, then I can help him get an answer to that question.

Hon David Parker: Is overcharging New Zealanders for ACC by hundreds of millions of dollars each year the main reason that support for National is collapsing in regions like Northland, or is it because of—

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. Firstly, the question makes an accusation that is completely unsubstantiated, and, secondly, it asks the Minister a question that can only be answered by someone who is on the political stump, not someone in Parliament who is accounting for a ministry.

Mr SPEAKER: I am not sure that is true. The Minister can answer in regard to the suggestion of overcharging, but she certainly does not have any responsibility for political parties’ polling in any region in New Zealand.

Hon David Parker: I raise a point of order, Mr Speaker.

Mr SPEAKER: What is the point of order?

Hon David Parker: The point of order from Mr Brownlee interrupted my question.

Mr SPEAKER: No. I am satisfied the question has been answered. [Interruption] Order! I am being very lenient by even allowing this member to ask this question. I am inviting the Minister to answer the question with regard to the suggestion of overcharging, but she certainly has no responsibility—

Hon David Parker: Point of order, Mr Speaker.

Mr SPEAKER: Order! I am on my feet, and my patience has just about failed with this member. I have been very generous to him. It is very doubtful as to whether the question he has asked is in order. I am assisting the member, and I am not getting much gratitude shown by the member I am trying to assist.

Hon David Parker: I raise a point of order, Mr Speaker. I appreciate that you feel that you have been generous to me. I am entitled to ask a supplementary question. My question was cut off by the Minister rising to his feet— 26 Mar 2015 Oral Questions Page 11 of 16

Mr SPEAKER: Order! You had moved to an area that was in danger—in fact, without doubt had made the question inconsistent with the Standing Orders. I could rule it out of order. I am very tempted to do so, and if the member rises to his feet again I can assure you that will be the result.

Hon NIKKI KAYE: I reject the statement in the member’s question. What I would say to the member and what we have consistently said is that we take a longer-term view in terms of the accounts because you are dealing with $30 billion, and $30 billion potentially around liabilities. So a $300 million shift is about 1 percent. What we have said is that we do not want a situation like Labour left us, where you have a $4.8 billion hole and you take into account the December shift in discount rates, which was $2 billion.

Māori Education Trust—Sale of Land 8. PITA PARAONE (NZ First) to the Minister of Education: What reports has she received, if any, about why the Māori Education Trust is selling its 320ha Kahutara dairy farm, the late Edward Holmes’ farm, that was gifted to the Trust to educate Wairarapa Māori?

Hon Gerry Brownlee: I raise a point of order, Mr Speaker. I would ask you to have a very good look at this primary question today. The first point I would make is that the question itself has a whole lot of information in it that tends to be there simply to justify the question, whereas in fact a simple question asking what reports she has received into the sale of the trust’s assets should cover the question. I think it is inappropriate that parties use primary questions and have them accepted by the Office of the Clerk when in fact they are loaded political questions. [Interruption]

Mr SPEAKER: No, I will deal with this matter. The question is in order, but marginally so. It is certainly not the only question today that is loaded with political statements. It has been accepted. The Minister certainly has a responsibility for answering in regard to whether she has seen any reports on this matter. We will then look to further supplementary questions, but the member is going to have to be very tight with his supplementary questions and ensure that they do relate to ministerial responsibility for an organisation that now operates as a charitable trust.

Hon HEKIA PARATA (Minister of Education): Tēnā koe, Mr Speaker. I have received a report from the Ministry of Education on the Māori Education Trust Board and the Mapuna Atea farm. The report makes it clear that the ministry’s interest in the trust is limited to the administration of those scholarships subsidised by Crown funding provided through the ministry. The ministry understands that the farm’s sale is needed to retire debt, improve the liquidity of the trust, and provide a more suitable income stream for future scholarships. As an independent charitable trust, this is a decision it is entitled to make.

Pita Paraone: When did a Government Minister last make an appointment to the Māori Education Trust Board, and which Minister made that appointment?

Mr SPEAKER: The Hon Hekia Parata, if the Minister has ever made such an appointment or if she is aware of whether any appointments have been made to the trust.

Hon HEKIA PARATA: I cannot answer that question because it is not actually generated by the primary question. I could not say whether a Minister of Education has made appointments. What I can say is that the deed document itself sets out which organisations may appoint members to it, and those organisations are so doing.

Pita Paraone: Did the Māori Education Trust Board guarantee a debt facility of $11.1 million, and how much was actually drawn down?

Mr SPEAKER: Order! The Minister has absolutely no responsibility for the trust.

Pita Paraone: Has the Minister had any discussions with any of her ministerial colleagues over the perilous financial state of the trust and its business operations, which has seen debt-laden assets sold; if so, when and what were the outcomes of those discussions?


Pita Paraone: Can the Minister name the advisers and consultants instructed by the Māori Education Trust Board to form its commercial arm— 26 Mar 2015 Oral Questions Page 12 of 16

Mr SPEAKER: Order! No, the Minister has got no responsibility for this trust.

Ron Mark: I raise a point of order, Mr Speaker. Relating to the second answer about discussions with other Ministers, could I ask you to ask the Minister to reflect on that answer?

Mr SPEAKER: Order! That is not a point of order.

Ron Mark: Well, it is—

Mr SPEAKER: Order! The member cannot do that at all. The question was asked; the question was answered.

Pita Paraone: Given that there has clearly been poor management of this trust, poor governance, and, even worse, oversight by the—

Mr SPEAKER: Order! I am waiting with patience to see whether there is any responsibility. Can the member please just ask the question in relation to a responsibility of the Minister.

Pita Paraone: Before I proceed—

Mr SPEAKER: Is the member seeking a point of order?

Pita Paraone: I raise a point of order, Mr Speaker. This trust receives funding from Government—

Mr SPEAKER: Order! That is not a point of order. I am very aware of that; I have done my homework. Does the member have a further supplementary question he wishes to ask that is related to a ministerial responsibility? Otherwise, I intend to move on.

Pita Paraone: I just have a point of order, Mr Speaker. [Interruption]

Mr SPEAKER: Order! A point of order will be heard in silence.

Pita Paraone: I seek leave to table a report named Commonwealth Education Partnerships, where the Minister of Education makes reference to the education trust.

Mr SPEAKER: Order! Leave is sought to table that particular report, Commonwealth Education Partnerships. Is there any objection to it being tabled? There is objection.

Electricity—Renewable Electricity Generation 9. JONATHAN YOUNG (National—New Plymouth) to the Minister of Energy and Resources: What reports has he received on renewable electricity generation in New Zealand?

Hon SIMON BRIDGES (Minister of Energy and Resources): The New Zealand Energy Quarterly released today shows that renewable energy made up 80 percent of New Zealand’s electricity generation in 2014. This year is the highest it has been since 1996 and is an increase of 5 percent on 2013. The overall trend of the last few years is exceptionally positive and shows that the Government is making strong progress towards our ambitious goal of having 90 percent of New Zealand’s electricity generated by renewables by 2025.

Jonathan Young: What particular renewables are making strong gains in electricity generation?

Hon SIMON BRIDGES: Geothermal continues to be a true success story for New Zealand. Geothermal generation has more than doubled over the past decade. For the first time in 40 years, electricity generated from geothermal contributed more energy to users than gas during 2014. Wind also contributes to make an important contribution to the electricity system. Generation from wind increased nearly 10 percent in the last year.

Jonathan Young: How is the Government capitalising on New Zealand’s strong renewables sector and expertise?

Hon SIMON BRIDGES: I think the figures are a reminder to us of the renewable advantage that we have as a country. I will be promoting our strong renewable advantage in April when New Zealand co-hosts the World Geothermal Congress in Melbourne. Currently, our exports in the renewable energy sector are around $100 million per annum. The Government is really ambitious for this to grow, and I will be taking every opportunity to promote New Zealand’s renewable advantage and expertise internationally. 26 Mar 2015 Oral Questions Page 13 of 16

Hon Te Ururoa Flavell: Given that some small rural communities can be adversely affected by poor electricity infrastructure, does the Government have any plans to incentivise small communities to move towards renewable electricity generation?

Hon SIMON BRIDGES: I do not concede that we have widespread poor electricity infrastructure. New Zealanders have near universal access to electricity services. I think we have got an open and competitive market for electricity generation that allows communities to invest in distributed generation where it makes sense economically. We are unlikely, I think, as a Government, to subsidise a system that we believe is working. What I would say to the member for the Māori Party is that I think that in renewables there are incredibly exciting opportunities for iwi and hapū, particularly in the central North Island, in partnership with the large energy companies. I am beginning to hear a number of discussions in that regard that, as I say, I think are very exciting for Māoridom in general for the future.

Animal Welfare—Cosmetics Testing 10. MOJO MATHERS (Green) to the Minister for Primary Industries: Will he support a ban on cosmetics testing on animals?

Hon JO GOODHEW (Associate Minister for Primary Industries) on behalf of the Minister for Primary Industries: Cabinet will be considering the proposed amendment from the Green Party and making a decision very soon. It is worth noting that there is no animal testing of cosmetic products in New Zealand and, to the best of our knowledge, there never has been. We support the intention of this amendment but we need to be sure that the wording is sound so that it does not have unintended consequences, such as banning testing of ingredients that might be in medicines that New Zealanders depend upon.

Mojo Mathers: I appreciate that answer. Is the Minister aware that some time ago a similar claim was made that the outdated and cruel LD50 tests were not carried out in New Zealand and that subsequent to that claim, at least one animal ethics committee has approved these tests?

Hon JO GOODHEW: No, I am not aware of that.

Mojo Mathers: I seek leave to table part of a transcript of a verbal submission to the Primary Production Committee in 1991 where Professor Gluckman says that there are no LD50 tests done in New Zealand and that they—

Mr SPEAKER: Order! The document has now been described. It is probably available, but as—[Interruption] The Clerk has advised, and I was going to say that 1991 is a long time ago and it is difficult for members to research back that far. On that basis, I will put the leave. Leave is sought to table that particular transcript. Is there any objection? There is none. It can be tabled.

Mojo Mathers: I seek leave to table an Official Information Act response from an animal ethics committee saying that it had approved three applications to undertake LD50 tests between 2008 and 2013—

Mr SPEAKER: Order! The document has been described. Leave is now sought to table an animal ethics committee report. Is there any objection to that being tabled? There is none. It can be tabled.

Mojo Mathers: Given that we cannot rely on assurances that particular cruel and unnecessary tests will not be approved, will the Minister support a ban on animal testing of cosmetics, as called for by more than 92,000 people?

Hon JO GOODHEW: As I have said to the member, Cabinet will shortly consider the amendment, and we will be doing so in light of making very sure that the wording will not have unintended consequences. In terms of the strict controls that are currently in place in New Zealand, we do need an independent ethics committee. Approval is sought before any animal testing can occur. Any project must show that the benefits will outweigh any harm that is caused.

Mojo Mathers: I seek leave to table the names of 92— 26 Mar 2015 Oral Questions Page 14 of 16

Mr SPEAKER: Order! No, I am not prepared to put that leave. It is not something that is informative for the House.

Mojo Mathers: Is the Minister aware that if National votes against my amendment to ban animal testing of cosmetics, we would be the first country in the world to have had the opportunity to do so and chosen not to, and does he think that will be good for our international reputation?

Hon JO GOODHEW: I can once again assure the member that Cabinet will very shortly consider the Green Party amendment. We will be looking to make sure that there are no unintended consequences from that, but giving it careful consideration.

Business Growth Agenda—Benefits for Small Businesses 11. TODD BARCLAY (National—Clutha-Southland) to the Minister for Small Business: How are small businesses benefiting from the innovation initiatives of the Business Growth Agenda?

Hon CRAIG FOSS (Minister for Small Business): The Government’s Business Growth Agenda contains more than 100 specific initiatives across the six keys inputs that small businesses need in order to be successful. The innovation strand of the Business Growth Agenda is assisting small businesses in a number of ways, such as the increased support for business research and development that Callaghan Innovation is leading and changes to New Zealand’s patent settings, enabling businesses to have greater certainly of their intellectual property, enforceable by world standards. These initiatives and many more support innovation and show why this Government is better for business.

Todd Barclay: What reports has the Minister seen on small and medium businesses benefiting from these innovation initiatives?

Hon CRAIG FOSS: I have seen a report that because of the Callaghan Innovation’s Better By Lean service the Ashburton company Ashford Handicrafts was able to innovate and introduce changes to be more responsive to customer demand. The innovations that they achieved in their manufacturing processes will free up time and resources to put into new product innovations this year. Innovations benefit small businesses, improving their costs, customer satisfaction, revenues, and margins.

Tracey Martin: In light of those answers, can the Minister explain why small businesses in rural Northland, such as in Wellsford, and small rural townships such as Wellsford and Te Hana are closing or continuing to struggle under his Government?

Hon CRAIG FOSS: I note recent growth of 7.8 percent, I think it was, in Northland, and so obviously many businesses are benefiting from innovation and this Government’s ongoing strong commitment to Northland.

Todd Barclay: What could have a negative impact on innovation in small and medium businesses?

Hon CRAIG FOSS: Small and medium sized businesses need time, money, and support to be able to innovate and grow their opportunities. If small and medium sized enterprises were burdened with new and complex taxes such as a capital gains tax, it would greatly reduce their ability to innovate. If small businesses were also faced with much higher wage costs such as an increase in the minimum wage to $16.25, it would greatly reduce their ability to innovate. New taxes and higher wage costs have a negative impact on innovation for small and medium enterprises.

Dr David Clark: Does the Business Growth Agenda aim to be innovative in cutting unnecessary overheads for business; if so, why does he not accept advice from ACC and Treasury that the Government should immediately stop overcharging businesses for ACC by $350 million?

Hon CRAIG FOSS: I think the member’s colleague presents that question a lot better—

Mr SPEAKER: Order! Just answer the question.

Hon CRAIG FOSS: For small businesses, overheads have decreased by $1.5 billion per annum in reduction in ACC levies by this Government. Small businesses’ overheads are reduced by this 26 Mar 2015 Oral Questions Page 15 of 16

Government, given the new certainty that we have—and they now have—in a sustainable ACC system.

Dr David Clark: I raise a point of order, Mr Speaker.

Mr SPEAKER: If the member is asking whether the question was addressed, it certainly was.

Dr David Clark: I see you have read my mind. Clearly, it was not addressed to my satisfaction.

Mr SPEAKER: Does the member have a supplementary question?

Dr David Clark: No.

Boarding Houses—Closures 12. Su’a WILLIAM SIO (Labour—Māngere) to the Minister for Building and Housing: Have all boarding houses that are “rat-infested, mouldy dives that are unfit for human habitation” been closed down since he said he wanted them eliminated in November 2014; if not, why not?

Hon PAULA BENNETT (Minister for Social Housing) on behalf of the Minister for Building and Housing: Let us be clear that if boarding houses in that condition exist, I would expect local councils to have taken action under the Health Act to rectify the issues or enforce closure. The Government received a report from the Social Services Committee in late 2014, and we have tabled our initial response early this year. We are awaiting advice from officials on implementing the recommendations we agreed with.

Su’a William Sio: Given his Government’s belief that “there is a risk that raising and enforcing minimum standards in boarding houses would reduce the supply of boarding house accommodation”, why does he not replace the worst slum boarding houses with a commitment to decent emergency housing that goes beyond the pathetic $500,000 announced by Paula Bennett yesterday?

Hon PAULA BENNETT: What he has been doing is liaising with the Minister for Social Housing, who actually, in regards to that emergency fund that was put in place, is looking after those organisations that are working with people who have emergency housing needs, seeing them needing a short-term injection of $500,000—which I am sure they are very pleased to be receiving—acknowledging that there are longer-term issues, that they want to work alongside of them, that are sustainable, that actually recognise that there might be more funding, and that is actually the way forward for them.

Su’a William Sio: Is it acceptable for any family to live in rat-infested, mouldy dives that are unfit for human habitation; if not, why has he not taken immediate action to shut down rogue operators in the boarding house sector, and why will he not set up a licensing regime and impose minimum standards to protect vulnerable communities housed in boarding houses?

Mr SPEAKER: The Hon Paula Bennett—any of those three supplementary questions.

Hon PAULA BENNETT: Let us be quite clear: boarding houses are regulated under the Residential Tenancies Act and the Health Act, amongst others. If it is the case that the members knows of boarding houses that are in that sort of condition, he should actually be getting hold of the local council and making sure that it is actually adhering to the Acts that are in place now that insist that there cannot be those kinds of living situations. So if the member is sitting here simply thinking that this is the way to address it, there is a means to do that and he has a responsibility to follow through on that.

Su’a William Sio: Does he honestly believe that it is up to the council, or that private providers of boarding houses can regulate themselves, given that he himself has acknowledged that some boarding houses are rat-infested, mouldy dives that are unfit for human habitation, and he is the Minister for Building and Housing with the power to prioritise funding for those most vulnerable in our communities?

Hon PAULA BENNETT: Let us be quite clear that the Government has come back from the select committee inquiry, which was far-reaching and had a number of recommendations that we agree with. As far as working through— 26 Mar 2015 Oral Questions Page 16 of 16

Phil Twyford: They were weak.

Hon PAULA BENNETT: Well, that member was on the select committee, was he not? So if he could not actually then influence that, then there are quite a few problems there. As far as building minimum standards, the Government is working its way through a response, but there are a number of Acts that should be adhered to that make sure there are not those kinds of living situations. And if the member knows of any, then he should be fronting up and making sure that they are followed through by the council.

Su’a William Sio: After being in Government for 7 years, why is he refusing to adequately protect the most vulnerable New Zealanders, who are increasingly being forced to turn to boarding houses because of his Government’s housing crisis?

Hon PAULA BENNETT: Well, I simply disagree with all of that statement.

Question No. 10 to Minister

Mr SPEAKER: Are we moving to another issue?

CHRIS HIPKINS: Yes, it is.

Mr SPEAKER: This is a fresh point of order.

CHRIS HIPKINS: The Standing Orders Committee made the recommendation through the Standing Orders review, at the end of about three parliaments ago, to stop members from tabling documents that were already publicly available. That was not a decision of the Speaker.


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